You've Got No Job!

Today, the pundits are a-buzz making sense of the latest
lackluster jobs report. Expect much hand-wringing over the impact of
the 'polar vortex' and that Punxsutawney Phil saw his shadow.

But most of us care more about the state of one particular job: our own.
How relevant is this latest bit of data to that? Not very.

So, to better understand the trends in the work environment most likely impact
our own paychecks, it will help to look at another bellwether similar to our
fuzzy groundhog friend: AOL.

AOL, a once-important pioneer in the transition to the 'digital economy',
is once again showing us where the future of work is headed.

Unfortunately, like the health of AOL's business over the past decade, it's
not a pretty picture.

The Expendable Employee

As we've transitioned to an economy in which corporate profitability -- and
thereby, stock prices -- is THE metric for success, the employer-employee relationship
has become much more superficial than in past generations.

No longer do workers expect (or in many cases, aspire) to work for a single
company for their entire careers. And with the cost efficiencies offered by
automation, outsourcing, temporary workers, and related trends -- companies
are much more inclined to view their workers as expendable and/or easily replaceable,
especially when facing a business downturn.

We've seen this dynamic play out in spades since the arrival of the 2008 credit
crisis. Companies immediately shed workers in droves as the economy slowed
down. But as things stabilized by 2010 and then the "recovery" of 2012-2013
sent corporate profits soaring, the pace of hiring those displaced workers
back has been nothing short of anemic:

It turns out that companies used the 2008-2009 layoff wave as an opportunity
to reduce their dependence on human capital (at least, US-based). A vigorous
debate can (and should) be waged on whether that happened for good reasons
or not, but the fact remains that the employment market remains frail over
5 years later.

More cynical critics will note that lower hiring budgets are NOT a result
of companies investing more heavily in productivity-boosting capital expenditures.
In fact, since 2008, CAPEX has remained depressed
by over 20% compared to historic averages. Rather, it seems companies have
been fattening profits by focusing on cutting costs, with the main intent of
boosting stock prices. Profits of companies within the S&P 500 are at all-time
highs right now. It's clear they're being artificially inflated, and most
likely by means that can't be long sustained.

Many companies have doubled-down on this approach, spending corporate profits
on stock buyback programs. This has only served to send shares higher (as I
type this, a headline just announced that Apple bought back $14
billion of its stock over the past two weeks). Is it any surprise this
is going on when company executives have fantastically-sized compensation packages
that are based on increases in.....oh, that's right... the price of their company's
stock?

"You've Got No Job!"

Enter AOL, which incidentally bought
back $600 million worth of its shares last August, along with a $1.1
billion special dividend to line its investors' pockets.

Since its ill-fated merger with Time Warner 14 years ago, AOL has been a train
wreck by most business metrics. It received a dose of much-needed hope when
former Google executive Tim Armstrong signed on as CEO in 2009, who was hired
to turn things around.

I'll leave it other writers to opine on Armstrong's degree of success since
then, but not surprisingly during his tenure, he's made a lot of cuts. AOL
has had a steady parade of layoffs over the years (including six months after
Armstrong's hiring, announcing it would cut
1/3 of its workforce).

And its the relentless drumbeat of its mass firings, and more notably, the
anti-septic manner in which they've been handled, that I think is emblematic
of the new era of the disposable worker.

Here's a powerful example. One of Tim Armstrong's first strategic deals after
taking the reigns at AOL was to buy a company he had earlier founded called
Patch. There was a boatload of drama around the Patch saga at AOL, but in order
to avoid getting too diverted, let it suffice to say that Patch proved a massive
distraction for the company. Armstrong was very personally invested in its
performance and made many promises to both its employees and Wall Street that
ultimately didn't materialize.

Last summer, Armstrong rallied the Patch team, calling on them to "fully commit" to
the company's plans for the future, which he promised he was hell-bent on supporting.
Then, jarringly, in mid-sentence during this pep talk, he was momentarily distracted
by an employee whom he then fired on the spot, in front of an audience of 1,000
(you can listen
to this drive-by canning here). This incident was reported at wildfire
speed among the tech blogs, sparking a debate about the treatment of employees
in the modern workplace - and questioning the wisdom of randomly firing people
during an event intended to boost morale.

But even more soulless is the latest sad development at Patch. Despite proclaiming
his "full" commitment as recently as August, Armstrong sold the controlling
stake in Patch last month to investment
firm Hale Global. Not surprisingly, soon after this deal was announced,
the hatchet soon swung.

I want you to listen here, as hundreds of Patch employees, many of whom stuck
with the struggling company for years at Armstrong's urging, learn that they
are losing their jobs, effective immediately:

"Thank you again. And best of luck". Oh, and you need to be out of the building
by 5pm.

Don't Remain Vulnerable

Was AOL too cruel here? Or is this simply the healthy Darwinian nature of
capitalism in action?

I'm going to leave that for others to debate; because that's not the point
of this article.

The point is: If you're an employee (which most folks reading this are), recognize
that the trend here is not your friend. For a variety of reasons, some defensible,
some not, corporations are increasingly less motivated to train, compensate,
develop and retain workers than in the past.

The question I want you to ask yourself is this: How impacted would my
life be if I unexpectedly received a pink slip tomorrow?

For most people, the answer is: Substantially. For too many: Devastating.

Bills, debts, family obligations, etc keep most people soldiering on in their
current jobs. Fears of lost income or the weak hiring market prevent folks
from taking career risks. Most just keep their heads down and hope the axe
doesn't fall on them. Of course, many of those who just celebrated 99 months
collecting unemployment once felt that way, too...

The unhappy truth here is that it's an increasingly vulnerable time to be
in the rank-and-file. And by 'rank-and-file', I mean pretty much anyone not
senior enough in their company to have a voice in headcount decisions.

If that definition applies to you, don't give in to denial or despair. Neither
will help you. And even if it may not feel like it at the moment, you have
much more agency in your career destiny than you likely realize.

There are defined steps you can take and investments you can make that will
dramatically reduce your vulnerability to the fickle hand of a company layoff
or a bad economy. A lot of the foundational work is described in depth in my
2013 book on career transition Finding
Your Way To Your Authentic Career, and much more can (and will) be written
on the subject at PeakProsperity.com. The following are *not* quick fixes;
they take a lot of inner work, dedication, perseverance and time to complete.
But these steps are indeed achievable, and will make your chances for career
success and security a heck of a lot higher than if you don't do them. The
basics include:

Identify the work you're best suited for based on your natural aptitudes,
interests and work experience - For many, this is the hardest step.
Our educational system is notoriously bad at helping people actually figure
out what kind of career path is right for them. The good news is that there
is a defined process that, if followed conscientiously, makes your chances
of identifying a "best fit" field highly probable -- even if you've been
in the workforce for decades. It's what the first half of my book focuses
on.

Make a career transition if you're currently in a 'bad-fit" field -
If you're not on a career track that plays to your strengths, you need to
move out of it. If you're in a bad-fit position, it's hard to outperform
(or even perform at the average), and you'll be in danger of being one of
the early casualties during a culling of non-essential employees. Making
a transition to a new career track is time-intensive; but again, quite doable
once you know what direction to head in (see above bullet). Not surprisingly,
this transition process is the focus of the second half of my book.

Become a domain expert with organizational ownership - Management
values most the talent it needs that is expensive (time and/or cost-wise)
to replace. It can always reduce budgets or department staff levels, but
it will do its utmost to retain talent that does work others can't (or can't
do as well or as cheaply).

Develop a professional support network - Make yourself known in
your field, particularly outside of your company. Be a source of useful industry
insights, and seek to learn as much as you share. Help other people. Seek
out mentors. People change firms often throughout their careers; after a
few years you'll find you have contacts across numerous companies. Should
you fall victim to a layoff, you'll have insiders at other firms working
on your behalf to get you hired in.

Develop a personal support network - Talk actively with family and
friends about what you are willing to do for each other should one of you
lose your job. How can you help ease the burden (meals, child care, loans,
etc) of the uncertain time between gainful employment? Figuring a plan out
in advance, and making deposits in the Bank of Karma by supporting struggling
folks in your community, will result in payback that will dramatically reduce
the shock of sudden job loss.

Create multiple streams of income - Ideally, you want to develop
enough diversity of income that the loss of any single one won't compromise
your lifestyle dramatically. Again, there are no easy short-cuts here. But
options include: taking on a second job, moonlighting, starting a side business,
enabling an unemployed family member to start a paying job, investing in
assets that produce cash flows/coupons/dividends, consulting, monetizing
existing assets (e.g., renting out a room on AirBnB),
etc. Spend some time deciding which approach seems most appropriate for you
and start with that one. Once you've got that second income started, as yourself: How
can I make it bigger? What other new sources can I add next?

Save - Start by amassing a rainy-day fund equal to 3 months of your
current monthly income. Then expand it to six. Then, if you're able to, a
year. This cushion will take the pressure off immensely if you find yourself
unexpectedly out of work. Concurrently, strive to not only live within your
means, but below them. Learn to appreciate non-material joys in life. You'll
reduce your expenses (the difference of which should go straight into savings)
in the immediate term, and be able to better maintain your quality of life
if your income takes a hit.

Develop a plan for business ownership - In the end, it's better
to be the one calling the shots than answering to them. Yes, there are other
types of risks that apply to business owners, but your employment and income
destinies are much more within your control as long as the business remains
solvent. As you currently build your domain expertise, develop a plan for
converting it into your ticket to independence. How can you use it to create
value that others will pay you for, versus depending on the single check
from your employer? If you have multiple customers, it's unlikely they'll
all stop doing business with you at once. With an employer, it's all or nothing.

This list is just a starting-off point, as entire books have been written
on each of the steps above. But if you fall in the 100% vulnerable-to-a-pink-slip
category, you should start thinking now about which one makes the most
sense to tackle first.

As help for those at the beginning of this process, Peak Prosperity is offering
its first-ever Countdown Deal for the Kindle version of Finding
Your Way To Your Authentic Career. The promotion starts on Saturday, Feb
7, runs for a week, and depending on the day, will offer the e-book for as
low as $0.99 (earlier buyers get the deepest discounts)

And The Hits Keep Coming

Even those who feel 'safe' in their jobs are seeing erosion of their 'purchasing
power' as employees. Let's look at AOL again.

Like most other companies in the US, AOL will incur costs in complying with
the Affordable Care Act. Its compliance expenses will be in the $millions,
annually. So today, Tim Armstrong announced that AOL was cutting 401k benefits
for its workers:

AOL Inc. (AOL) blamed
President Barack Obama's
health-care law for its plan to reduce spending on contributions to employees'
401(k) retirement plans.

AOL, owner of websites such as the Huffington
Post, will still match employee contributions to retirement plans up
to 3 percent of their paychecks, Chief Executive Officer Tim
Armstrong said. Under the new policy, it will make the matching payments
in a lump sum at the end of the year, forcing employees who leave before
then to forfeit the benefit, he said in an interview today on CNBC.

"Obamacare is an additional $7.1 million expense for us as a company," Armstrong
said. "We have to decide whether to pass that expense to employees or cut
other benefits."

The White House is defending the law from criticism that it causes consumers
more economic harm than good. Republicans have seized on a report this week
by the Congressional
Budget Office, which said Obamacare will reduce the hours Americans work
by the equivalent of 2 million full-time jobs in 2017.

Armstrong didn't specify how the health-care law had increased costs for
New York-based AOL. The CEO told employees today that the health-care expenses
of two employees in 2012 played a role in his decision on which benefits
to cut, Capital New York reported.
The two workers had "distressed babies that were born," costing AOL $1 million
each, he said, indicating that he'd rather prioritize health care over retirement
among the company's benefits.

So, even the 'safe' salaried professionals are more vulnerable than they realize.
Do you think they have any alternative other than "take it or leave it" to
this news?

Parting Shot

If this article hasn't already driven home the point that employers are increasingly
motivated to find ways to cut employee costs -- and employees themselves --
out of the picture, perhaps this simple example will do the trick.

In the past, those finding themselves between jobs could often rely on unskilled,
but unpleasant, work to provide temporary subsistence income. Well, more and
more of those jobs are going away, largely due to performance advancements
and cost declines in automation.

Ever see a sign spinner on a street corner and think "I guess if I couldn't
find work elsewhere, I could always do that?". Not anymore. The robots are
taking over:

Not only does the encroachment of automation remove income options for those
temporarily out of work, but it's increasingly limiting the options for the
large pool of unskilled labor with few other alternatives. Of course, this
opens up a whole spectrum of economic, social, technological and policy-related
questions, which will have to wait for another day...

But the takeaway is: Don't be 100% vulnerable. If you're employed,
but at risk, use the time and income you have now to reduce the upheaval a
pink slip could wreak on your life.

Even a 10-20% reduction in your vulnerability will mean a world of difference
if you find yourself suddenly out of work. Your future self will be extremely
grateful of the steps you take today.

Adam is the President and Co-Founder of Peak Prosperity. Basically, his job
is to handle the business side of things so that Chris is free to think & write.

Adam is an experienced Silicon Valley internet executive and Stanford MBA.
Prior to partnering with Chris (Adam was General Manager of the earlier site,
ChrisMartenson.com), Adam was a Vice President at Yahoo!, a company he served
for nine years. Before that he did the 'startup thing' (mySimon.com, sold
to CNET in 2001). As a fresh-faced college graduate, he got a first-hand look
at all that was broken with Wall Street as an investment banking analyst.
Most important, he's a devoted husband and dad.